In a recent conversation, Mayank Pokharna sat down with Martin Fleischer, a seasoned real estate expert, to discuss the evolving landscape of coliving and shared living. Below are some key takeaways from their discussion on how coliving is transforming the housing market and what it means for both entrepreneurs and residents.
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Where did your interest in the world of coliving start?
My interest dates back to 2009, when the concept didn't even exist yet. At that time, I used to spend my summers in a place in Uruguay called Punta del Este, where I noticed a growing influx of tourists, primarily backpackers. These were people who wanted to experience tourism in a different way, more connected to the local culture and eager to learn from it. At that time, I wrote my first business plan, which linked Uruguayan culture with the possibility of longer stays to immerse in it. This project aimed to solve several issues: on one hand, the loneliness experienced by solo travellers by providing them with a welcoming community, and on the other, facilitating cultural immersion through activities like tango lessons, Spanish, candombe, and other typical Uruguayan arts. Additionally, it sought to address the seasonality of tourism in Uruguay, which is very strong during the summer but drops significantly in autumn, spring, and especially winter. This way, I offered stays of 3 to 6 months, a suitable time for travellers to connect with the culture, learn, and even contribute value. However, this project was never realised because it needed to differentiate itself from hostels, and it hadn't yet proven its profitability as an untested concept.
A few years later, in 2010, during the housing emergency declared by President Mujica's government, two of my best friends, Architect Mauro Robles and Architect Emilio Magnone, and I conducted research on the waste from rice production to see if it could be viable to generate a construction material, either in the form of panels or blocks. The results were very promising, not only in terms of strength but also thermal insulation. After learning this, we wrote a project proposal and submitted it to Trinity University in Chicago, where we secured capital investment to start a company called ECORISE, in partnership with an American associate named Matt Daniels, who is now a project director at Solomon Builders in Nashville, USA. This company (Ecorise) focused on the manufacturing of plywood blocks incorporating rice husk or rice husk ash. These blocks were like Legos that could be interlocked, allowing the construction of a 70sqm house in less than seven days. Unfortunately, after discovering that this rice harvest waste could be used for biomass generation, our primary raw material became more valuable, which changed our entire business model, leading us to sell the machines and the project to a local builder who worked with bricklayer cooperatives in our country.
Then in 2014, Architect Emilio Magnone, who designed the first Coworking space for the SINERGIA chain in Uruguay, taught me a lot about both Coworking and Coliving concepts. He also took me to visit the construction sites and shared with me the progress of his project. By 2016, when I decided to move to Madrid, this Coworking space had already become a benchmark in Uruguay, and SINERGIA was expanding.
I spent several years in Madrid focusing on administration and sales, but finally, in 2019, I decided to move to Southeast Asia for a while. I spent that
year living in Indonesia, Thailand, and Malaysia, staying in Coliving spaces and working in Coworking spaces. By then, the concept was much more advanced; in fact, those countries were and still are leaders in this concept, and I learned not only the essence of these spaces but also the needs of a growing audience. The new generations were not only backpackers but also remote workers who carried their work with them. While in Asia, I began planning a coliving project there, but when I heard about a remote village in the mountains of Madrid that was suffering from depopulation (60 inhabitants), I thought it could be a good idea to bring a Coliving space to such a place. This way, we could offer a relatively rare alternative, such as a Rural or mountain Coliving for an audience that mostly had options on the coast. Additionally, being part of an already existing small community would make it easier for digital nomads to integrate and learn about the local culture. Moreover, having these young, creative people in the village would add value and revitalise the local economy. After three and a half years, the population surpassed 100 inhabitants, compared to 60 in the last census in 2018, the average age dropped, and activities such as music festivals, short film festivals, and Pride Day celebrations were organised. An electric car charging station was installed, and a number of digital nomads from various parts of the world were welcomed.
My interest in this collaborative living model has evolved over the years, but what hasn't changed is my desire to improve people's quality of life, especially in these times when there is a need for more affordable housing solutions without compromising people's dignity. This also involves fostering the essence that has driven humanity's evolution: collaboration among people.
In your experience as the founder of El Refugio, what economic challenges might an entrepreneur in this sector face? Any particularly difficult obstacles?
There are several factors that I believe still influence the process of starting a coliving venture.
Firstly, there is a real lack of understanding about what Coliving is, and the concept is often distorted. Let me explain: Coliving is still a new concept for many. I've found myself in situations where I've had to explain to even architects what this concept entails and the advantages it offers, not only for the user but also for those who decide to build a coliving space.
On the other hand, during the pandemic, when the hospitality sector was hit so hard, many people in various regions of Spain, seeing the trend towards Coliving as a potential way to improve occupancy, began using the concept for stays that aren't really Coliving but are simply rural houses, small hotels, or boutiques. The problem is that using the Coliving concept to promote accommodations that don't fit the model ends up affecting not only the users but also the genuine promoters.
Additionally, a significant economic challenge is something that many might see as positive, which is the high profitability and profit margins. Why is this a
challenge? Because it's such a new and unfamiliar concept, these margins can create distrust among potential investors or promoters, making self promotion often the only option. The fact that a Coliving space with 80% occupancy by the second year is already profitable is something that's not widely seen. Fortunately, today there are major investment funds that are gradually starting to invest exclusively in Coliving and Coworking, which is opening up opportunities and building confidence.
Lastly, there is a lack of support from public entities. To this day, there are no clear regulations on the matter, with certain gaps that can particularly affect permits and licenses. But not only that, public organisations have the potential to create a positive impact on two sectors that are opposite sides of the same coin. On one hand, there is a housing shortage and overpopulation in areas like the Balearic Islands, where more housing is needed to meet demand, and there is also a rapid increase in rents. On the other hand, in areas like Soria or Extremadura, there are high levels of rural depopulation. Almost all municipalities have buildings that are either unused or barely used and could be perfectly converted into Coliving spaces with proper study and management. This would provide a dignified and more affordable option in places like the Balearic Islands or attractive options for people who want to repopulate in depopulated areas.
Reflecting on El Refugio, how many people have approximately passed through the Coliving space in the last two years?
Despite the short time I spent managing this project, which was ultimately three and a half years, the balance has been positive in many aspects.
Mainly because it proved the positive impact a project like this can have on a rural community in Spain. It created jobs, brought in young people, organised events that are still being held today, and turned the village into a pioneer by installing an electric car charging station in a biosphere reserve, which led other municipalities in the region to consider the possibility of generating additional charging points. Many digital nomads from various countries, such as the USA, Germany, the UK, the Netherlands, Belgium, Argentina, Venezuela, and Brazil, among others, stayed there, and some of our clients who initially came as guests ended up buying houses and becoming active members of the community. All of this gives me a very positive outlook.
In terms of numbers, despite the setbacks of the pandemic and considering that we started in January 2020 and the pandemic hit us in March of the same year, we have had ups and downs, but we managed to bring 3,500 people through our establishment (including restaurant diners) in a village of 60 inhabitants in one year. We averaged 85 Colivers per year, not counting company groups and others who reserved rooms for their teams.
Have you noticed any differences between the state of coliving in Spain and abroad?
Yes, I have noticed differences, not only between Spain and other countries but also between different countries themselves. The approaches vary greatly depending on the economy and the culture of each country, which is why we work based on three models of Coliving: a more rural or nature connected model, an urban model, and a senior model (for those over 60 years old).
In the case of Southeast Asia, a region that has been a trend for backpackers and is now popular with digital nomads for many years, its culture and natural environment, which is what most attracts travellers, make the rural model, with villas designed for shorter stays, very common. For example, today I am in Chiang Mai, in two or three weeks I will be in Bali, and in another three or four weeks I will be in Cambodia. This influences how spaces are integrated with nature, the layout of collaborative spaces, and how the community is fostered.
Then there are cases like London, where the aim is to provide a housing solution for those moving to the city, but it is a temporary solution, and in these cases, the focus is much more on urban environments. Also, the audience is often more focused on professionals looking to create connections that can help them develop their professional careers. Another example of an urban coliving model is Lisbon, which also has an influx of digital nomads and is one of the most sought after places for this type of traveler. There, we see people who travel for longer periods of time or decide to base themselves there for several months. These are travellers who are primarily seeking the social aspect of living together, knowing that they will return to their country sooner or later.
In the case of Spain, it's a mix of everything. The Spanish territory is very diverse, so we can find a wide variety of coliving spaces, such as in Andalusia or the Mediterranean coast, especially in areas like the Canary Islands, which is a classic destination, much like Southeast Asia. Additionally, we have a large influx of digital nomads who come to work for a while, so the urban model fits very well in cities like Madrid, Barcelona, or Valencia, but it also allows people to move to cities like Malaga, Bilbao, and Seville, among others.
However, in Spain, something I notice is still lacking is a regulatory framework. For example, in Thailand, when the government saw the strong trend of people moving to the country with their work, they created a visa that allows people to stay legally for a year, and there is an initiative to extend it to three years. A digital nomad visa is also being considered in Indonesia. These types of measures could benefit many sectors of the economy.
Another point to consider is that Spain is, by excellence, a country where people decide to retire. It's one of the countries with the best climate, life expectancy, and quality of life in UE. This leads us to the senior coliving model, a concept that is already very developed in countries like the USA, which
consists of a similar structure to urban or rural coliving but designed for an older audience who may have specific needs or require additional care. We have many retirees from other countries who have already moved to the Balearic Islands, Canary Islands, or the Costa Brava, and the projection is that this trend will increase, so it's an opportunity to explore this niche.
What role do you think the rise of remote work has played in the development of the Coliving movement?
The emergence of remote work and digital nomadism has played a key role in the development of Coliving spaces. Many people who had never considered the possibility of living and working from anywhere have become potential users of Coliving spaces. The global pandemic accelerated this process, and today, more and more companies are allowing or even encouraging their employees to work remotely. This has led to a greater demand for flexible and collaborative living spaces, where people cannot only work but also connect with others, which is a fundamental aspect of Coliving.
Remote work has also contributed to the diversification of Coliving spaces. In the past, Coliving was mainly associated with urban environments and young professionals. Now, we are seeing Coliving spaces in rural areas, for seniors, for families, and for other niche groups. This diversification is a response to the different needs and preferences of remote workers, who may want to live closer to nature, in a community with other families, or in a place that offers specialised services.
Moreover, the rise of remote work has also had an impact on the design and operation of Coliving spaces. There is now a greater emphasis on providing high quality workspaces, reliable internet connections, and amenities that support work-life balance. Coliving spaces are no longer just a place to sleep; they are places where people can live, work, and thrive together.
What are the 3 or 4 key elements that any coliving property should have?
It's a great question, especially considering what I mentioned earlier about the recent distortion of the concept by some operators. From my point of view, the key elements that define a place as coliving are as follows:
First, the location. While there are different coliving models, such as rural or urban, both must have some level of transportation connectivity, or at least the coliving itself should provide it. This ensures that it is not too far from an urban area—it could be two hours by car, but not in overly remote or inaccessible locations (just as an example). Essentially, it should have certain essential services within a reasonable and accessible distance. This is important not only for the users but also for the profitability of the business. For this reason, not every neighborhood in a city or every rural town can be a good location. A feasibility study is necessary to determine with more certainty if the location is suitable.
Secondly, the design of common areas and rooms is crucial. While some places may have common spaces, they are not always designed to foster connectivity or collaboration among the residents. This might seem surprising to those of us who aren't architects, but a professional in that field would understand exactly what I mean. That's why when a specific property is acquired for coliving, it is often necessary to study or even redesign the spaces. When starting from scratch, it is important to consider these spaces from the outset, as they are key in shaping the dynamics of the residents. By these spaces, I mean kitchens and dining areas, lounges and living rooms, and importantly, workspaces. The latter are not always given enough consideration, but they need to have ergonomic furniture, good internet connectivity, and a certain level of lighting designed specifically to help foster concentration for workers.
Thirdly, the business model must be adaptable to allow flexibility in rental contracts, for example. Contracts should accommodate both medium- and long-term stays, considering an international clientele that may not have Spanish paychecks or fixed contracts. And, of course, pricing should be aligned with the target market; a 25-year-old digital nomad will have different needs than a 60-year-old adult. Additionally, services should be adjusted as fairly as possible to meet these diverse needs.
Finally, and I believe most importantly, the human factor, which truly makes a difference and influences not only the users but also the future of the business: the community. Creating a communal and collaborative environment is key to the future of coliving. Through events and activities, we encourage interaction; interest groups like art, sports, technology, or even networking are essential to coliving life. It's important to remember that for many colivers, the community is a potential source of work or learning. For example, an architect and an interior designer might meet in a coliving space, or a coliver might offer a social media marketing workshop that helps everyone else promote their projects. These types of interactions are what form the true essence of coliving and the community that develops around it.
In terms of trends, how do you foresee the future of coliving?
Honestly, I believe we are at a critical moment. We have skyrocketing rental and property prices in major cities, depopulated areas, and more companies opting to allow their employees to work remotely. The number of self employed workers who travel while working is also increasing. It's a generational shift that was already gaining momentum, and the pandemic accelerated it to the point where not only the younger generations but also older individuals have discovered that the need for a proper balance between work and community life is much more important than we previously thought. The isolation caused significant issues across all age groups, the consequences of which we are still dealing with today, and this type of collaborative living helps address them to a large extent. Among young people, depression and anxiety increased due to the lack of social interaction, and for people over 60,
the feeling of loneliness causes more problems than smoking. At the same time, different economic realities create gaps. This is why, from a social perspective, it's undeniable that coliving offers a solution and will continue to grow.
On the other hand, speaking coldly and pragmatically about the business itself, it will also become an increasingly attractive market for investors and private operators, as it already represents higher returns than traditional real estate ventures. In fact, there are already Venture Capital Funds focused purely and exclusively on coliving.
At CIT, how many locations are in your portfolio? Are they all in Spain? Is there any region or autonomous community that is more attractive to an investor?
Currently, we are working on four projects in different locations, two of which are outside of Spain, one in Uruguay and another in Portugal, and they are two completely different models. In Uruguay, due to its demographic and economic characteristics (very similar to Europe and Spain), we are focusing on a senior audience. The one in Portugal is rural and targeted at a more digital nomad audience aged 25 to 40, with a stronger connection to nature. The other two projects are in Spain, one in Andalusia, also rural, and one in the Balearic Islands, which is more urban.
Regarding regions or autonomous communities, as I mentioned earlier, the beauty of Spain is its natural and climatic diversity, so each area has its own advantages. However, considering the demand from target audiences, social needs, and construction costs, I would highlight the north, everything from Asturias and Cantabria, the Balearic Islands, and then certain areas of the Valencian Community and some parts of Andalusia.
Do you have any projects in the works that you can share?
We are working on a very interesting rural project 20 minutes from Ronda. Beyond the proximity to that beautiful heritage city, what makes it really interesting is that it emerged from a sense of collaborative work and the intention to support the revitalizsation of rural areas through coliving. We are working on it together with another coliving company based in Burgo de Osma called OpenOrbi, with whom we have built a very close relationship over the years. We have exchanged knowledge, shared community, and now, after four years of collaboration, we are diving into this project, which aims to promote the economic revival of a village with incredible natural wealth and much to offer in terms of quality of life for those who want to work from a place that offers the right balance between professional life and nature.
And on another note, as a "bonus track," we are currently in the investment round to launch our own project. This time not coliving but a luxury coworking space covering 1,300 sqm, with a range of services and amenities that will allow a clientele, mainly foreign entrepreneurs who spend most of their time in
Spain, not to worry about setting up their office or branch but simply to enjoy making connections and doing what's best for their business.
To Conclude, from your perspective, what advice would you give to someone who wants to get started in the Coliving industry?
Starting a Coliving venture is a unique and rewarding journey, but it also comes with its challenges. Based on my experience, here are some key pieces of advice for anyone interested in entering the Coliving industry:
1. Understand the Concept: Before diving into Coliving, make sure you have a deep understanding of what it entails. Coliving is not just about providing a place to live; it's about creating a community where people can connect, collaborate, and grow together. The social aspect is as important as the physical space.
2. Research Your Market: Different markets have different needs and preferences. Conduct thorough research to understand the demand in your target location, the types of people who might be interested in Coliving, and what they are looking for in a living space. This will help you tailor your offering to meet the needs of your target audience.
3. Focus on Community Building: The success of a Coliving space largely depends on the strength of the community. Invest time and resources in creating a welcoming and inclusive environment. Organise events, activities, and workshops that bring people together and foster a sense of belonging.
4. Be Flexible and Adaptable: The Coliving industry is still evolving, and so are the needs and expectations of its users. Be open to feedback and be willing to adapt your offering as the market changes. Flexibility is key to staying relevant and successful in this industry.
5. Prioritise Sustainability: Sustainability is becoming increasingly important to many people, especially younger generations. Consider incorporating eco-friendly practices and materials into your Coliving space. Not only is this good for the environment, but it can also be a selling point for attracting environmentally conscious residents.
6. Build Strong Partnerships: Collaborate with local businesses, service providers, and other stakeholders to enhance the value of your Coliving space. Partnerships can help you offer additional services, create unique experiences for your residents, and build a strong network within the community.
7. Plan for the Long Term: Coliving is not a get rich quick scheme. It requires careful planning, investment, and a long term vision. Be patient and focus on building a sustainable business that can grow and evolve over time.
8. Stay Informed About Regulations: The legal landscape for Coliving is still developing, and regulations can vary widely depending on the location. Stay informed about local laws and regulations, and be prepared to navigate any challenges related to permits, licenses, and zoning.
By following these guidelines and staying committed to the core values of Coliving, you can create a successful and meaningful project that positively impacts the lives of its residents and the broader community.